i mentioned at the top of the show the purported reasons for oil short term moves just today but other longer term developments in oil and gas are fueling a broader discussion about game changers in the energy outlook and the u.s. attorney general announced just today he had a press conference a four point five billion dollars settlement with b.p. which will plead guilty to criminal charges reportedly two over the deep horizon oil spill this afternoon reminding us things don't always go as planned when it comes to energy outlooks but remember let's back up earlier this week the international energy agency report it is forecasting that the u.s. will be the world's top oil producer by twenty twenty is projected by twenty thirty five to be virtually self-sufficient in oil with modest imports coming from secure suppliers but for the most part to be self-sufficient and also new fuel efficiency measures and transportation will begin to occur u.s. oil demand is another fault finding that the result is a continued fall in u.s. oil imports to the extent that north america becomes

a net exporter around twenty thirty now this shift according to the i.a.e.a. will be driven primarily by excel aerated extraction of natural gas and oil from shale and other tight rock formations as a result of technologies specific hydraulic fracturing and horizontal drilling and opec last week admitted for the first time that shale oil production in the u.s. would significantly diminish its share of the u.s. market so joining me now with a much more new wants to view of the factors involved here. he's chief energy investment strategist at casey research and i'm very very happy to have you on the show thank you so much for being on with us today my pleasure ok so let's bring up the. view in terms of the demand and the production in u.s. oil we actually have a chart which we're going to bring up but it shows how they're forecasting that demand will go down and that production will rise now this is attributed to shale

oil and gas in the. some like jamie diamond have called this a gift from the gods others consider it a commercial failure and are concerned about the environmental impacts so my question is what is your view on it particularly d.c. the u.s. becoming energy self-sufficient as a result of it and if so and what timeframe first of all no they will not be energy self-sufficient and the time frame of the given if you go back through history the reports there is many many years just like america was going to be a major net importer of l n g energy just ten years ago so the game changed that said there is a lot of potential for the shale gas but you see that it all comes down to costs what price those that block in the coal now so saudi dakoda what price is the box and when will it become you know cost effective but what price is the eagle ford you know will work for the americans and the reality is it does not work at fifty

dollar will if they want to use the unconventional oil you're going to need plus eighty dollars prices moving forward that said let's not forget that a lot of these unconventional she'll be isms are what they call liquid rich but it's mostly that they're getting the gas and that's where we're going to get this interesting point here so you know there's a lot moving on in the world and what we need to focus on is what is america doing to export all of this known g. energy and their decades away from what i think that's a great point i want to get into that little later but first i want to get into a little more of the nuts and bolts on the production side because you have said that shale wells to climb much more rapidly than conventional wells that as much or more than a fifty percent decline after the first year so does the resulting need in constant drilling and commissioning of wells make this a stain of all production impractical. it all comes down again to costs and when

you know when you go back to the original. what they call the big elephant oil deposits you look what's going on saudi arabia and go back to spindle talk to originally in america you're looking at fifty one hundred thousand barrels a day production those are world class deposits today few get ten thousand barrels a day that's known in the top five percent of all of the wells globally what we're talking about today with those unconventional out of those two three hundred barrels a day from each one of these wells so even four or five years ago when they would do four to a fracs per well now they're getting up to sixty four fracs per well so yes the you can produce a lot but you need to drill a lot and that's high cost of oil ok and also i know that water is required when it comes to hydraulic fracturing and getting natural gas so what is it do to water politics and water is a touchy thing is this something that will come more into play i think so there's

the education there's the science behind the reality is is the shale rock or the rock through its use is so much deeper than the water reservoirs and with the new technologies like poseidon and with the water systems that they have in the fracking you know you do need between two to five million gallons in a million gallons per frac job ok that's a lot a lot of water yes and now think of a member i said between two to three hundred on average to three hundred barrels a day of this production and then in twelve months it reduces by fifty percent but the crime rates are massive so now you can imagine how many. well if you have the frog to replace one well in saudi arabia wow so it's a long way to go and we're talking about natural gas and oil and they're often want to get there because they're both hydro carbons people use them in the same sentence but these are very different commodities how did the market mechanics deafer from one to the other but definitely i'm going to move the area so if you

look at the pad district of america does this refining complex first of all america's got the best refining complex in the world it can refine just under eighteen million barrels of oil a day a lot of this oil is not in the areas where you need to refine it so they've got to build the pipeline so you know with obama coming in and he wants to take care of both the left in the right people and the promise everything to everybody the reality is there's only so much oil you can ship on the on the rail we need to invest in new pipelines going to the new areas and what is ironic that the keystone x.l. being delayed america today imports more venezuelan oil than it's producing in bach and even with the success of the bucket that's very interesting but what about in terms of exporting natural gas i mean or oil is a global commodity and natural gas is much more limited regionally because they are not easy to export you have to liquify it right correct so it's a very localized market so yes you look at japan their pain over fifteen dollars

per m.c.f. in europe it's about three times what it is in the u.s. today unfortunately it costs billions of dollars to build a lick of acacia plant which takes the gas and condenses that by over six hundred times think about this is a terrorist attack waiting to happen so you've got to remember that part of permitting and then they have to ship it out so you know right now america can't do that so it's going to take a long time think about how much per meeting in the delays in just a pipeline to remind all these are in jeeps months actually ship of the world and the reality is russia has three right now it's already behind the russians and the russians are going. in the middle east and getting involved in the is really to get their own deep attention so you know a lot of things are moving on and on paper it's great for a bunch of bureaucrats to say all the potentials can be great america is going to be c. and it fits perfectly with obama's you know revolution but the reality is it takes a lot more money and a lot more time. with the bureaucrats think it just of telling off of something you

said earlier why is this right for a terrorist attack why is that people have to worry about you know think about it you take it if you condense it by over six hundred times and if you look over big the superstructures these l. and g. tankers are one in one thousand dollar missile to blow up the whole facility. interesting ok and you mentioned a bureaucracy regulation that so often pay plays a role member in california they had all these alternative energy plans but then realized oh wait we're going to get them out and find there are two they were right exactly it was it was a challenge that they hadn't quite factored into their very aggressive goals so along those lines according to fanciulla times the u.s. has approved only one the core five natural gas plant with export capabilities that it's in cameron parish louisiana it's not slated to begin export ing until two thousand and fifteen according to this article interestingly china and singapore have jointly invested a billion dollars in this plant so have some investors blackstone group so as

natural gas does become exportable from the us what impact might this have on natural gas prices in the u.s. market. almost none really it will make up less than twenty percent of the production it has today so everyone's talking about if you just sit down to do the mathematics what these bureaucrats have to understand that it will make up less than a fifth of what you're producing certain things that the holy grail is going to be producing you know time to all you know to japan and china and everyone else it doesn't fly like that would have us of could tar which has the largest facility right now in the world just says ok we want to have longer term our takes on a much cheaper price on top of that america hasn't built their first facility yet but about cost overruns what about dudley's what about labor there are so many factors that go in and i think that we'll see that it's going to cost a lot more money with the inflation and cap ex and also it's going to be take a lot longer to get going ok and also to we forget how much oil is used in so many

different things marilyn cosmetics carpet great shampoo what did you say your i phone yeah lipstick tire shaving cream i think concrete i mean the list goes on and on so also i don't see very many natural gas fueling stations so what do you see is the likelihood of a replacement for oil with natural gas. i think will or will start as i had lunch with t. boone pickens i think the pickens plan is actually a very smart plan for america and i'm surprised it's not getting more momentum where they want to start is on the long haul trucks it makes up less than about four or five percent of america's room usage but makes up just under twenty percent of the fuel usage so that's where you want to start with do we see the s.u.v. switching to see n.-g. and not quite yet but you know there are places in india where they now brought in you have to have c n g but it works for lower powered vehicles you know it doesn't

work with your cadillac or your trans am or your mustang if you go to moon by new delhi it works on those little you know three wheelers so i think. again maybe start with the pickens plan that's a good place to start but it's not going to see energy is not going to replace the oil and really quickly just before we go what would you say are the biggest headwinds in this this report that you don't buy that that this is even going to happen this i.a.e.a. report that we're going to become energy self-sufficient in the u.s. or that all everything is going to work perfectly so what are the biggest factors just quickly that are the headwinds against us happening well number one most of the producers are losing money today so you know this report doesn't take into the market side or the financial side of producing this unconventional oil so that's number one number two the decline rates and they have to invest a lot of money to prove up so remember for one well in saudi arabia we have to drill one thousand wells ok those are some some good headwinds right there we'll

leave it there i appreciate you for showing us just such a more nuanced picture than these reports that capture headlines that was marine could too said chief energy investment strategist for casey research and still ahead what does the health panel's report on m.f. global mean for the criminal and civil case against john kors i and also about politics we'll talk about it after the break but first your closing market numbers . wealthy british style. is not on the. market why not. find out what's really happening to the global

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my daddy. does a famous phrase. rancid business.

welcome back a long awaited report from the house financial services committee on m.f. global is out ninety seven page is nothing earth shattering in the way of calling for criminal charges against john and so for those that were hoping for that didn't make it but joining you from our new york studio to talk about what did and if this matters is john rowe co-founder of the commodity customer coalition he's been fighting on behalf of and the global customers since his firm collapse so thanks for being on the show thank you for having me yeah ok so the full report is out i'm

sure you've read it i know you've spoken with members of congress over time that have been working on this you've also been fighting on behalf of customers so is there anything groundbreaking in this report. there's nothing groundbreaking it is a nice concise timeline of events with footnoted information sort of that puts everything together in one place the case against corazon himself the facts about the firm why it failed what happened and when it happened ok so great news for someone who someday wants to write the book on what happened they need a good timeline but for people like yourself and james could do less now why no have been finding this damning evidence and a least i know for james i don't speak for you there has been some some hope for a criminal case does this hurt that cause certainly not it's another data point in that case it's not congress's job to pursue criminal action that of course rests with the department justice and executive branch and what they can do is say hey

look we found this they're not passing judgment on intent that's a very difficult question the part of the justice is going to have to look at but what they are saying is there obviously were some problems that happened at m.f. global these problems were directly attributable to mr corps and it's time for regulators and the people that are in whose job it is to prosecute the wall and wrongdoers to to go after this guy so i think while it's not maybe the smoking gun hey we have it now it is yet another data point we have a sip a trustees report we now have a report from congress and we have to regulatory agencies that have yet to file any civil charges which have a much lower burden of proof then criminal charges i think it's a positive development it is certainly not earth shattering but it is something we've been looking for for a long time ok and i'm just really dying to know if it includes the most damning evidence that john corps i knew that customer money was potentially at risk and being transferred ahead of the collapse of m.f.

global well there's no single piece that directly points to that in this report but we think that there's certainly evidence of that in the super trustees report where . but you have a body of evidence that corazon put into place things that he knew were going to potentially put customer money at risk and in the final week when you have a liquidity crunch that's unprecedented and they're moving money around and they know it's coming from customer accounts and they were aware that they were using what's known as the alternative method to calculate what their excess funds were in segregation and they knew that if they moved the money around a little bit too quickly or too hastily or something didn't come back that they would actually be using customer funds they certainly knew or should have known which is the legal standard that's in question here the customer money was at risk in the final week and you know whether or not we actually get a criminal charge in this is beyond sort of i think our ability to influence that's going to be on the department of justice is. what we can do though as an industry

is make sure that john course i never touches customer money again the national future says association which james and i are now running for to be on the board of directors has the authority to ban him from membership of the national he just you know what that would do is prevent him from getting a license to be in a position where he's acting as the principal of a company that's managing funds and segregated and what you want to know why that hasn't happened yet. but i would be one of those who wonders that yeah there's a almost no standard of evidence for this you need a ten member business conduct committee to decide that someone that has you know violated just an equitable principles of trade will that i mean absolutely happened the day m.f. global went to bankruptcy with a shortfall in customer property yeah so you got enough evidence to do that i don't know why it's taken the n.f.c. a year to find out we're certainly going to try to get on the board there and make sure that john corazon can never touch a customer segregated funds again i hear you i appreciate you for working on that

but i am dying to know to this house panel report it was only signed on to by republicans so no democrat signed on so. i'm curious about this for a few reasons a does it make it pretty easy to dismiss this report as politically motivated because it doesn't have bipartisan support and b. does this say something about what it requires for anyone in washington to take down a big banker with the goldman connections that you need that political motivated motivation on this in this case the republican side well there's no doubt it definitely says that we have a partisanship in washington that unprecedented levels i mean i did think justice was a partisan issue and apparently it is in this case corps' on obviously was a person of considerable power not only was see bundling money for president obama and his campaign but he also bungled money for the detroit will see and for congressional campaigns and senate campaigns these contribute a lot of people on the hill now all those people aren't there anymore because of what happened in two thousand and ten but the fact that not

a single democrat signed on to the report initially and they did say they were going to file an addendum and we're waiting for that we're hoping that they're going to rebuke mr cores on some very strong language but the fact they didn't even bother to sign on to this or refuse to sign on to this is indicative to me that if you're have the right relationships and you've spread enough money around capitol hill you can certainly evade some scrutiny from your friends and it's very very sad to see that it's very very sad to say that i know mr corazon didn't bother to check the party affiliation of m.f. global customers when he raided their accounts to save his failing brokerage so i don't know why he's a sacred cow on the hill other than to say that all of the skeptics and cynics are right that there's too much influential there's too much influence from wall street in washington and it's literally taking half almost half in this case of government out of prosecuting john cores in or out of being interested in seeing justice done because well he was one of ours where is my answer to if that's what it takes to

take down a big bank or those wall street connections if you have the political motivation that that would help you politically if you take down a member of the opposite party we'll leave that but i want to know because this report did place some blame on regulators. you obviously are trying to kind of work within the system running for the board of the f.a.a. but is this made you last lose faith and regulators entirely there i don't however i don't think or have much faith in regulators in the first place we know that regulation just like i guess police action is sort of an after the fact in a lot of cases it's very difficult to prevent fraud they are underfunded they don't have enough people etc etc etc but the reality is that we can't wait and expect them to do their job we have countless instances where they failed so what we need is something that will be there when and help folks when they don't do their job and we have a couple of reform measures that we're working on a customer protection fund to provide some insurance for when they fail again an alternative form of segregation were instead of giving your money to a broker

a commodity broker you leave it at a bank and margin your positions from there that puts you in the f.b.i. c. system and prevents the broker from swiping the funds in the middle of the night there we have some some solution possibly on the horizon i appreciate you talking about all this with us john breaux i will wait to see that that report from the democrats before we unfairly say that they're not you know coming out and saying maybe what they should will be interesting to see if my couple want to as outspoken in that report as he was during those hearings when he was conjuring the memory of and ron we will leave it there for today john breaux co-founder of the commodity customer coalition thanks so much thank you. all realize probably has changed dimitri or do you know this actor because you've

seen every movie in the world so let's take a lot of. distorting breed a metal hat and a big barrel and he throws it on him for two. the plane obviously making fun of the shelter peeing in the aisle on a city jet flight from paris to dublin a few weeks ago. so these friends actors are our day pardieu well known and now possibly well known for getting out of france presumably to get away from that seventy percent income tax for people making over a million euros so a belgian newspaper reported that he bought a mansion in belgium and an area populated with many french ex-pats so dimitri do you think this is a rich french guy saying go drink belgian beer and pay less income tax than what francoise hollande wants from me right well the belgian government is sending him thank you letters and flowers. because they can have his taxes in belgium

when belgium for whatever income is going to be generating yeah like the point is that now the belgian government gets all the taxes that he would paying in france where you know our audience was still you guys not because you're wondering why the news greencard dimitry no one is what i hear the average thing i learned it's a great movie ok we couldn't use it cause there was no good image we just don't think it was livable probably was gerard depardieu playing playing the piano mattingly that was the most important thing that goes bad he went on that is about you know having a long time i think it's interesting because it's good when you have example that's a talking point when you say oh giving these really high taxes makes people believe it's different when you have a high profile people that actually are leaving we don't it's not confirmed if that's why he's leaving but it just you know there's no doubt it's going to be something else that everybody will want seventy five percent still fifty percent you could come to the u.s. where there are thirty five well if you live in new york there are thirty five there fifty percent because then you have state and local and everything else all

right so i mean whatever the reason is your opinion you want to hang on you're one of us are plenty of other things that could drop there but all right if you want to talk about like those serious specific as for the taxes. it's a perfect example because guys like this are going to tax because they're going to tax on income but if you're a hedge fund manager and you're going to actually carried interest or if you're warren buffett or whoever else the other guys are mitt romney i don't write how mitt romney into paying in the teens there are that's what we should be worried about not taxing the crap out of you are the producer he leaves france or goes to belgium well and buys a castle yeah really funny sentence from from the article and see if you see the report on this it was that he moved from france to belgium where income tax is only fifty percent which is a quite which is a sentence that you never hear this is a weird sentence because it has only fifty percent doesn't sound because that's because they raised the seventy five present because we have to we're going to assume you want ninety percent that's going to go to where you are down there or out of time so you'll have to let him get away with it because that's all going on time for thank you so much for watching be sure to come back tomorrow in the

meantime you know you can follow me on twitter you can like our facebook page there is the address right there you can watch any shows you mislead us comments at youtube dot com slash capital account watch us in h.d. on hulu and from everyone here thank you so much for watching come back tomorrow have a great. world . science technology innovation all the developments from around russia we've got the future covered. resistance

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